Our long term goal is to investigate if manipulation of the Hedgehog pathway can be used to enhance pancreatic endocrine and beta-cell development. Hedgehog genes encode secreted proteins that induce gut formation but inhibit pancreas formation early in fetal development. Their role after initial pancreas formation is unknown, but in vitro evidence suggests that Hedgehog ligands are required for beta-cell maturation and function at later stages.The objective of this study is to test the requirement of Hedgehog signals during beta-cell development and differentiation in vivo, focusing on two questions: 1) What is the role of Hedgehog signaling during beta-cell and islet development after the initial stages of pancreas formation and 2) what is the function of individual Hedgehog ligands during these processes? Our general approach is to investigate islet formation and beta-cell differentiation in mice lacking, or ectopically expressing, key molecules of the Hedgehog signaling pathway. The first specific aim of this proposal is to analyze pancreas and islet deficiencies in mice mutant for Hip, a novel inhibitor of the Hedgehog signaling pathway. The second specific aim is to inactivate Hedgehog activity after pancreatic morphogenesis has been initiated, but before mature endocrine cells form. We will use the Pax4 and rat insulin promoter to either broadly express Hip within the pancreatic epithelium or to specifically inactivate Hedgehog signaling in maturing beta-cells. The third specific aim is to analyze the requirement of the two Hedgehog genes Indian and Desert Hedgehog during pancreas development and islet formation. We will use established knockout lines of both genes that have been intercrossed to generate double mutants. The fourth specific aim is to compare the individual roles of the three mammalian Hedgehog genes through ectopic expression of each ligand during endocrine and beta-cell differentiation. In summary, the molecular and physiological analysis of Hedgehog-mediated signaling will add to our understanding of islet and beta-cell differentiation. We expect that knowledge derived from these studies may contribute to the development of new cell-replacement strategies for treatment of patients suffering from diabetes.